Dulux extends offer, remains firm on price

Dulux Group
’s $188 million bid for garage door and construction materials business Alesco appears to be headed for a stalemate.

The paint group’s first deadline for acceptance passed with major shareholders still refusing to take the offer price and the Alesco board recommending against it.

Dulux on Tuesday extended its $2 per share bid for Alesco until July 20, and could extend further. The paints group had made its intial bid for Alesco on May 1 but the target company’s board rejected the offer on June 12.

Despite expectations from Alesco’s institutional shareholders and analysts that Dulux would probably increase its offer, Mr Houlihan said the group would proceed in a disciplined manner, even if it meant being stuck with a 19.96 per cent stake, he said. Dulux has not announced any changes to its Alesco shareholding, highlighting that the majority of remaining Alesco holders seem to be holding out for a higher offer.

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“Given Australian housing market conditions continue to deteriorate, the longer Dulux is able to extend the offer period, the more attractive the bid may look," Deutsche Bank research associate John Hynd said.

However, the broker said it would not be surprised if Dulux increased the offer to gain board approval, given it has not been declared “final" by the paint maker. Alesco was said to be taking a “business as usual" approach to Dulux’s extension.